Howard Gold's No-Nonsense Investing: Democrats’ ‘socialism’ will bury us in debt we won’t be able to get out from under

The recent stunning upset victory by 28-year-old former bartender Alexandria Ocasio-Cortez over Democratic leader Joe Crowley in the primary in New York’s 14th Congressional District has made her an instant political superstar.

She has appeared on “Meet the Press,” fielded hundreds of interview requests and has been touted as the new face of the Democratic Party. A former Bernie Sanders campaigner, she is a self-proclaimed socialist whose mission appears to be to rescue those discredited ideas from the dustbin of history.

Never mind that she won an overwhelmingly Democratic district with voter turnout of a minuscule 12%. And never mind that mainstream Democrats have soundly beaten Berniecrats in many races across the country.

‘Galaxy twinkled’

The media, particularly The New York Times, has gone ga-ga over Ocasio-Cortez. Jaded columnist Maureen Dowd, apparently bored to tears by decades of family dynasties like the Bushes, Clintons and Trumps, declared “through this black miasma, one small corner of the galaxy twinkled, offering hope.” May the Force be with you, Maureen.

But Times columnist Paul Krugman gave the new political phenom the ultimate imprimatur, with all the gravitas of his Nobel Prize in economics. In a column titled “Radical Democrats Are Pretty Reasonable,” he particularly praised Ocasio-Cortez’s support of a jobs guarantee for all working-age Americans, writing, “It’s a response to real problems, and it’s not at all a crazy idea.”

Yes, a crazy idea

With all due respect, Dr. Krugman, it is a crazy idea and the sum total of her platform is wackiness on steroids.

I’m pretty sure few voters in NY 14 read that document, just as most Trump voters didn’t delve into his policy positions. People vote mostly by gut, and voters saw both Trump and Ocasio-Cortez as change agents, though in radically different directions.

But several potential 2020 Democratic presidential candidates, including Sanders and senators Elizabeth Warren of Massachusetts, who co-sponsored Sanders’ “Medicare for all” bill; Corey Booker of New Jersey; Kamala Harris of California; and Kirsten Gillibrand of New York; have endorsed big chunks of it (the jobs guarantee plus a $15-an-hour national minimum wage, Medicare for all, and free public college tuition for everyone). So by the time voters go to the polls in November 2020, this may be Democratic orthodoxy.

That’s too bad, because not only do these radical plans not stand a chance of passing a highly polarized Congress; they’re genuinely bad ideas. Why?

Running out of money

Primarily because, repeat after me, we just can’t afford them.

Let’s start with Medicare for all. Didn’t any of these politicians read the recent report by the trustees for Medicare and Social Security stating that the Social Security trust fund will run out of money in 2034 and Medicare’s fund will go insolvent by 2026? Truth is, with 10,000 baby boomers turning 65 every day from now until 2029, we can barely afford the current program, let alone expanding it to the whole population.

But if we did, it — and the free-public-tuition giveaway, when barely a third of Americans have a four-year college degree — would add $32 trillion to the national debt over the following decade (or a mere $18 trillion if Sen. Sanders’ 2016 tax increases on the rich were also passed to pay for some of it), according to the Tax Policy Center.

That’s more than 10 times as much as the Republicans’ recent tax-cut giveaways to its big corporate donors are projected to add over the next decade and would, at the very least, more than double the national debt in the hands of the public, which is currently over $15 trillion.

Also, thanks to a profligate GOP, we’re going to see trillion-dollar annual federal deficits for years to come. These plans could easily triple those annual gaps.

Howard Gleckman of the Tax Policy Center estimated the original Sanders plan would add $3 trillion in interest costs alone, calling it “an unprecedented increase in government borrowing.” By the way, the Tax Policy Center isn’t some right-wing think tank; it’s affiliated with the left of center Urban Institute and Brookings Institution. But their economists know how to add and subtract.

Krugman estimates the guaranteed-job proposal — which comes as the unemployment rate is hitting multiyear lows — would cost around $270 billion a year. Former Democratic Treasury Secretary Lawrence Summers pegs the cost at $840 billion annually. And what would all these people actually do on their taxpayer-subsidized jobs?

Add the maraschino cherry on this rich cake — Ocasio-Cortez’s plan to forgive all student debt — and you get another $ 1 trillion-plus goodie. A trillion here, a trillion there, and pretty soon it’s real money.

Total price tag: anywhere from $20 trillion to $40 trillion over 10 years, depending on how much taxes would have to be raised to pay for all this.

Ever since the election, Democrats have been desperate for “big ideas” to defeat President Trump and Republicans at the polls. But these hare-brained schemes ain’t it.